Parking your capital in a trillion-dollar company is a solid investment strategy. These companies usually have a global reach, solid market presence, and enormous resources, making them safe investments.
But if you are looking for incredible growth instead of safety, the trick is to invest in companies that are on their way to becoming trillion-dollar giants. If you can capture even a substantial part of a company’s climb to this threshold, your capital gains can be massive.
There are two Canadian and one U.S. stock that may be on track to reach a valuation of a trillion dollars in a decade or less.
A semiconductor giant
Advanced Micro Devices (NASDAQ: AMD) is one of the largest semiconductor companies in the world. It’s well known for its computer processors and graphics chips (GPUs), the latter of which is likely to propel the company to the trillion-dollar market valuation. There is already a precedent in the market in the form of Nvidia, which has risen over 13,000% in the last decade to become a trillion-dollar company.
The reason why AMD might follow the same pattern is GPUs. So far, Nvidia’s GPUs are more powerful and highly coveted for a wide range of powerful computing needs, like crypto mining and AI. But considering the exponential growth of the AI market, AMD can easily capture a larger slice of the market than it has now.
A software holding company
Constellation Software (TSX: CSU) is easily the most consistent growth stock in Canada’s tech sector. It has risen over 1,400% in the last decade to reach a market valuation of about $73 billion, and it’s on its way to a trillion-dollar market value by just repeating this performance in the coming decades. If you add dividends into the mix, it may reach this point well before a decade.
One of the reasons behind the stock’s consistent ascent is its ownership structure. The general public owns just over half the company (52%), while 41% is owned by institutions and about 6.9% by insiders. This gives the stock a significant amount of stability. It also has a massive global reach and a compelling portfolio of software companies.
An e-commerce company
Shopify (TSX: SHOP) is a global e-commerce giant and once one of the most explosive growth stocks in Canada. For a time, it dethroned Royal Bank of Canada to become the most valuable Canadian company. However, that has changed since a massive slump that caused Shopify to lose over 80% of its valuation.
But the company has gotten back on track and more than doubled its market value in the last 12 months, reaching a market cap of $137 billion, making it the most valuable tech stock in Canada. If it continues growing at this rate and can capitalize on the opportunities offered by AI, there is a good chance that the company may reach a trillion-dollar market valuation in a decade.
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Foolish takeaway
Based on their current valuation, the three companies can offer investors a growth factor of 3X to 13X in the next 10 years if they reach the trillion-dollar mark. However, it’s important to take into consideration the factors that may have an impact on their growth pace or pattern before you make a buying decision.
